## What Is Universal Basic Income? ## Source details **Canonical URL:** [What Is Universal Basic Income?](https://www.imf.org/en/publications/fandd/issues/2018/12/what-is-universal-basic-income-basics) ## Other formats - [Markdown version](/en/publications/fandd/issues/2018/12/what-is-universal-basic-income-basics/index.md) - [Structured JSON version](/en/publications/fandd/issues/2018/12/what-is-universal-basic-income-basics/index.json) - [Bundle manifest](/en/publications/fandd/issues/2018/12/what-is-universal-basic-income-basics/bundle-manifest.json) ## Bibliographic details - Authors: MAURA FRANCESE, DELPHINE PRADY - Published: December 1, 2018 --- ### Definition and scope - Universal basic income is an income support mechanism typically intended to reach all (or a very large portion of the population) with no (or minimal) conditions. - There is no established common understanding; very different income-support programs are often labeled "universal basic income," even when they have little in common or do not aim at the same goal. - Ongoing and prospective experiments vary widely in design and objectives (examples cited in the source: Finland, Kenya, California). ### Key design features and variants - Programs grouped under the universal basic income umbrella differ along several dimensions: - Does it replace or complement other social protection programs? - Is the recipient an individual or a household? - How is the pool of beneficiaries defined? - What is the timing of the payment? - Are there conditions attached? - Historical and scholarly variants noted in the source: - Thomas Paine’s (1797) "ground-rent" resembling a categorical capital grant. - Milton Friedman’s (1968) "negative income tax" intended to replace the welfare state. - Philippe Van Parijs (1992) advocating a regular, universal, unconditional, and generous cash transfer. - Anthony Atkinson’s (1996) "participation income" complementing existing programs and conditioned on social participation. - Two common traits across the spectrum: - Universality—or very large—coverage of individuals in society. - Unconditionality—or very broadly conditioned provision. ### Arguments in favor - Better targeting of the poor compared with means-tested programs, which can fail due to administrative capacity, high information and administrative costs, poor targeting mechanisms, and social stigma. - Potential to save administrative costs and increase transparency, reducing discretion and corruption. - Useful as a strategic instrument to support structural reforms, including removal of inefficient programs like energy subsidies (Coady and Prady 2018 referenced in the source). - Can improve efficiency by avoiding sharp withdrawal of benefits as earned income increases, which can discourage labor market participation. ### Arguments against - Sustainability concerns: high fiscal costs because all households—including middle- and high-income households—receive the benefit. - Efficiency concerns: potential undermining of work incentives and work ethics. - Opportunity costs: risk of diverting scarce resources from priorities such as health, education, and investment. ### Policy trade-offs and implementation considerations - Policymakers face trade-offs along key dimensions: - Coverage at the bottom of the income distribution versus leakage to richer households. - Generosity of transfers versus incentives and economic distortions (for example, the decision to enter the labor market and the number of hours worked). - Fiscal cost versus alternative use of scarce fiscal resources. - A fourth consideration: reconciling objectives with implementation challenges, including the government’s capacity to raise resources equitably and sustainably and to roll out a complex transfer program. - Country-specific circumstances matter: - Limited administrative capacity in developing economies argues for more universal transfer programs, but displacement of other priorities where revenue mobilization is problematic—particularly in the short term—is a concern. - In advanced economies, universal basic income is often considered to address inadequate safety nets and challenges from technological and demographic changes. - Financing must be assessed, including rechanneling resources used elsewhere or raising higher taxes and contributions. ### Empirical assessment guidance - Comparative analysis should evaluate the redistributive performance of existing social safety nets, a universal basic income, and potential alternatives. - Both the spending and the tax side of the budget shape distributional outcomes; a comprehensive analysis should evaluate both to ensure progressivity (gradually increasing net burden on more affluent households and larger benefits for more vulnerable households). - Analyses must consider fiscal sustainability and the trade-offs of different design choices. *Source: What Is Universal Basic Income? – IMF Finance & Development Magazine | December 2018* --- ## Content in this bundle - **عودة إلى الأسس** - [عودة إلى الأسس (Markdown version)](/-/media/files/publications/fandd/article/2018/december/ar/basics.pdf.md){rel="alternate" type="text/markdown"} - [عودة إلى الأسس (PDF)](/-/media/files/publications/fandd/article/2018/december/ar/basics.pdf){rel="external" type="application/pdf"} - **¿Qué es el ingreso básico universal? - Revista Finanzas y Desarrollo del FMI | diciembre de 2018** - [¿Qué es el ingreso básico universal? - Revista Finanzas y Desarrollo del FMI | diciembre de 2018 (Markdown version)](/-/media/files/publications/fandd/article/2018/december/es/basics.pdf.md){rel="alternate" type="text/markdown"} - [¿Qué es el ingreso básico universal? - Revista Finanzas y Desarrollo del FMI | diciembre de 2018 (PDF)](/-/media/files/publications/fandd/article/2018/december/es/basics.pdf){rel="external" type="application/pdf"} - **Что такое универсальный базовый доход? – журнал МВФ «Финансы и развитие» | Декабрь 2018** - [Что такое универсальный базовый доход? – журнал МВФ «Финансы и развитие» | Декабрь 2018 (Markdown version)](/-/media/files/publications/fandd/article/2018/december/ru/basics.pdf.md){rel="alternate" type="text/markdown"} - [Что такое универсальный базовый доход? – журнал МВФ «Финансы и развитие» | Декабрь 2018 (PDF)](/-/media/files/publications/fandd/article/2018/december/ru/basics.pdf){rel="external" type="application/pdf"} - **Что такое универсальный базовый доход? – журнал МВФ «Финансы и развитие» | Декабрь 2018** - [Что такое универсальный базовый доход? – журнал МВФ «Финансы и развитие» | Декабрь 2018 (Markdown version)](/-/media/files/publications/fandd/article/2018/december/zh/basics.pdf.md){rel="alternate" type="text/markdown"} - [Что такое универсальный базовый доход? – журнал МВФ «Финансы и развитие» | Декабрь 2018 (PDF)](/-/media/files/publications/fandd/article/2018/december/zh/basics.pdf){rel="external" type="application/pdf"} - **wp18174** - [wp18174 (Markdown version)](/-/media/files/publications/wp/2018/wp18174.pdf.md){rel="alternate" type="text/markdown"} - [wp18174 (PDF)](/-/media/files/publications/wp/2018/wp18174.pdf){rel="external" type="application/pdf"} --- _Source: https://www.imf.org/en/publications/fandd/issues/2018/12/what-is-universal-basic-income-basics_